Mutual fund shareholders who bought Vanguards actively managed mutual funds earned greater returns and incurred less risk than others who held onto the firm's coveted index mutual funds during the same 27-year period ending Dec. 31, according to an study in the upcoming Journal of Portfolio Management. Vanguard, which rose to prominence as the No. 2 mutual fund company on a foundation largely built from low-cost index funds, on average generated higher returns for investors in its 73 actively managed mutual funds, according to the study. According to an advance draft of the studys findings, actively managed funds provided more protection from sudden market downturns, such as the last bear market. In addition, a hypothetical portfolio of Vanguards actively managed funds earned an average annualized 8.67% return, compared to a separate portfolio of passively managed index funds that earned 7.90% during the same 27-year period. The actively managed portfolio outpaced its passively managed counterpart with less risk, as measured by its standard deviation, which was respectively 14.31 compared to 15.85.